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Margarita [4]
3 years ago
15

"Choate International plans to issue $15 million in 10-year bonds. They believe they can afford to pay $1,150,000 in interest to

bondholders each year. Which annual interest rate should they use for their bonds?
Business
1 answer:
Rudiy273 years ago
4 0

Answer:

They should use interest rate of 7.7%

Explanation:

The rate (let's call it r) should be that the annual interest of the $15,000,000 that they borrow through isssuing bond is $1,150,000

Then 15*10^6 * r = 1,150,000 => r = (1.15*10^6)/(15*10^6) = 0.077 or 7.7%

<u>Note:</u> $1,150,000 is the annual amount they could set aside for paying interest, so they should use 7.7%. If it's lower than what market requires they will have to sell the bond at a discount. If it's higher than is required they the bond would be bought at a higher price than par-value.

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Attributed sampling states that items being sampled will either or won't possess certain attributes or quantities.

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3 years ago
From the following ledger balances, prepare a trial balance for the Whispering Winds Corp. at June 30, 2022. All account balance
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Answer:

Realidades 2 WKBK page 109

Explanation:

Realidades 2 WKBK page 109

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2 years ago
Jacob is saving up for a down payment on a car. He plans to invest $2,000 at the end of every year for 5 years. If the interest
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The answer would have to be B

7 0
3 years ago
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3. This year, Paula and Simon (married filing jointly) estimate that their tax liability will be $200,000. Last year, their tota
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Answer:

When a taxpayer has an underpayment of estimated tax or fall behind on his/her tax prepayment, then he/she is required to pay a penalty on Form 2210. This penalty is called underpayment penalty.

According to the tax laws, Mr. P and Ms. S can avoid an underpayment penalty if their withholding's and estimated tax payments equal or exceed one of the following two safe harbors:

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From the above calculation, it is clear that Mr. P and Ms. S's withholding's ($175,000) do not equal or exceed the amount of two safe harbors. So, they need to increase their withholding's or make estimated payments to avoid underpayment penalty.

If Mr. P and Ms. S increase their withholding's by $5,000 or make estimated payments of $1,250

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3 years ago
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A 1-year gold futures contract is selling for $1,645. Spot gold prices are $1,592 and the 1-year risk-free rate is 3%. The arbit
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The arbitrage profit implied by these prices is $5.24.

<h3>Arbitrage profit</h3>

Given:

Future contract= 1645

Sport gold price = 1592

Risk-free rate (rf) = .03

Hence:

Arbitrage profit=1645-[1592(1+1.03)¹]

Arbitrage profit=1645- 1639.76

Arbitrage profit=1645 =$5.24

Therefore the arbitrage profit implied by these prices is $5.24.

Learn more about  arbitrage profit here:brainly.com/question/15394730

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